Nintendo: The Software Payoff Is Still Ahead

LL Insights 722 Followers Follow Summary Nintendo is rated Buy, driven by its robust software earnings and potential for digital and IP-driven growth. NTDOY’s investment thesis centers on recurring software sales, digital expansion, and monetization of iconic characters via films, merchandise, and theme parks. Management’s FY-2027 forecast is ¥2.05T revenue and ¥370B operating profit; I model FY-2028 at ¥2.3T sales and ¥552B operating income. At $13.22 per ADR (20x forward P/E), NTDOY offers margin expansion potential; my modeled fair value is $16 per ADR. winhorse/iStock Unreleased via Getty Images The Better Business Arrives After the Console Nintendo’s ( NTDOY ) software earnings make the company attractive to me while the console transition clouds the financial picture. Manufacturing costs associated with a new console This article was written by LL Insights 722 Followers Follow I am a retired quant with a PhD in mechanical engineering. I started off my professional career as an engineer and eventually transitioned into a hybrid developer/quantative analyst role at the investment arm of one of the nation's largest insurance companies.I ended my career as a fixed income specialist, with a strong focus on developing mathematical models for the trading desk. Our investment arm consistently outperformed industry averages and ranks among the top global asset managers for fixed income markets.I have a particular interest in fixed-income and technology equities.I have recently returned to work as a Chief Developer at one of the largest financial firms in the U.S. +34.30% Average annual return per ratingClosely associated with Simple Investment Ideas Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.